First think about how much money you want to use to get started in trading. Then the question arises: which broker could be the right one for an account of that size?
I myself started with a modest sum of 50 euros.
That is far too little
to really trade with, and there are certainly enough experts who would put the minimum at 5,000 euros or more. I did not let that discourage me, though, and I implemented my plan as follows.
The idea of investing money in the stock market had occupied me for a long time. On the one hand, the fear of losses kept me from taking the first step. On the other hand, there were the relatively high initial deposits, and one more very important point: I had no idea what I was getting into!
A small or a large account?
In films and the media it always looks very simple: buy, sell, and ideally make a profit. One way to earn money in the market that I learned at my first seminar: do nothing! Simply skip a trade, for example because the rules are not completely met. Especially at the beginning I still tended to trade anyway. Whenever I had the time (an important factor when you work all day as a car mechanic earning money for anything other than big trading accounts) to sit in front of the PC and watch the charts and blinking prices, I wanted to do something too (that is, trade).
So a quick check of EUR/USD, and ping: a few euros profit, a few euros loss. This kind of behavior probably gave rise to the old market adage "Back and forth makes pockets empty". For every back and forth, the broker takes a small part of the amount you trade. That is the so-called spread, the difference between the price at which you buy and the price at which you then sell again. I took the first step by buying a really good magazine. It also explained trading strategies and chart technique.
Which broker?
Inevitably, I then found an ad from a broker on an advertising page. Here you could open an account without a minimum deposit. Since this was a few years ago, you have significantly more options today for finding such a broker.
If you also start with such a broker and can only spare a small sum to fund your account, it is advisable to be aware of one thing: these accounts do not represent trading in a professional form. There are certainly very good platforms with fast execution and extensive features, including good charting, but in the market you face experienced traders with direct market access and far better speed and equipment.
What does the broker do?
When you trade on such platforms, your counterparty is always the broker. The most commonly used instruments on these platforms are CFDs (contracts for difference). This means that, put simply, you enter into a bet with the broker on whether the underlying (the asset you place the bet on, which can be an index, a stock, a currency, commodities, and so on) will rise or fall in price.
I opened my account with my first broker and deposited my 50 euros. I also used a small trick: from the start I followed a strategy with loss limitation. For example, I budgeted a maximum loss of 5 euros per trade. That gave me, in theory, ten trades. Depending on the position, the broker requires an amount as collateral. Without the corresponding capital in your account you cannot trade.
How much time do you want to invest?
I also did not have enough time to make more than five trades a month, and after a loss I also lacked motivation for a few days. These are all human factors that work against a winning system. The secret of my growing account was that I regularly set aside a small sum at the beginning of each month and paid it into the trading account. As my margin grew (the amount the broker requires as collateral), I could try out different instruments and get familiar with trading and with the fee structure. You can do that very well with a demo account too. The real learning effect, however, only kicks in when it hurts a little. So very quickly a few instruments emerged whose fee structures work for small accounts.
For me these were currencies (forex) and indices (for example S&P 500, DAX). Stocks, on the other hand, require a high margin. In my experience they also carry high fees in CFD trading. Over time I opened a separate account for them, with which I pursued a kind of stock savings plan. I recently transferred this account to a new broker. Here I have more options (including options trading) and a cheaper fee structure.
Trading CFDs carries a high risk of loss. This article describes personal experience, is for information purposes only, and does not constitute investment advice.